FACTORS INFLUENCING THE MUSLIM CONSUMER’S LEVEL OF

CONFIDENCE ON HALAL LOGO ISSUED BY JAKIM: AN EMPIRICAL

STUDY

By

AHMADI MASNONO

Research report submitted in partial fulfillment of the requirement for the degree of

Master of Business Administration

University Sains Malaysia

March 2005

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DEDICATION

To my understanding, patient and loving wife Siti Rathiah Nasiman and three sons,

Muhammad Faris, Muhammad Fahmi and Muhammad Fauzan

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ACKNOWLEDGEMENT

First of all, I would like to express my sincere appreciation to Dr. Suhaiza Hanim

Mohamad Zailani and Dr. Nabsiah Abd. Wahid for giving me the invaluable guidance,

moral support, and the direction of the research, without whom this research would have

not been accomplished.

I also would like to give my sincere thought to my true friends of MBA; Amin

Arwani Razalli, Lee Hee Long and Mazdhee Mohaman Hussain for their encouragement,

support, motivation and valuable advice. We spent our toughest time together and make it

through together. Also special thanks to my other fellow MBA with whom we spent our

time together in coursework group, Ngoi Yong Kong, Noresma Jahya, Mohd Nazri

Musir, Sarinah and Vincent Tan. Hopefully our friendship will continues to blossom.

Last but not least, I would like to extend my highest admiration to my wife and

the three sons for their love, support, understanding and encouragement. Hopefully this

thesis will become an inspiration for my sons to overcome hurdles in the journey of this

life.

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TABLE OF CONTENTS

Page

ACKNOWLEDGEMENT

TABLE OF CONTENTS

LIST OF TABLES

LIST OF FIGURES

ABSTRAK

ABSTRACT

Chapter 1: INTRODUCTION

1.0 Overview of Halal Food Industry in Malaysia

1.1 Background of the Study

1.2 Problem Statement

1.3 Objective of the Study

1.4 Research Questions

1.5 Significance of the Study

1.6 Definition of Key Variables

1.7 Organization of the thesis

Chapter 2: LITERATURE REVIEW

2.0 Introduction

2.1 The Halal Food

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2.2 Halal Certification

2.3 Importance of Certification

2.4 Factors that Influence Level of Confidence

2.4.1 Product Packaging

2.4.2 Product Labeling

2.4.3 Product Produced

2.4.4 Media

2.4.5 Religiosity

2.4.6 Company’s Image

2.4.7 Other Certifications

2.5 Theoretical Framework

2.6 Hypotheses

Chapter 3: METHODOLOGY

3.0 Introduction

3.1 Research Design

3.2 Data Collection method

3.3 Variables and Measurement

3.3.1 Independent Variables

3.3.2 Dependent Variables

3.4 Data analysis methods

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Chapter 4: RESULT AND ANALYSIS

4.0 Introduction

4.1 Descriptive Analysis

4.1.1 The sample characteristic

4.1.2 Consumer perception profile

4.2 Reliability of measurement

4.3 Correlation analysis

4.4 Hypotheses testing

4.5 Summary of result

Chapter 5: DISCUSSION AND CONCLUSION

5.0 Introduction

5.1 Discussion of major findings

5.2 Implications of study

5.3 Limitations of study

5.4 Suggestions for future research

5.5 Conclusions

BIBLOIGRAPHY

APPENDICES

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LIST OF TABLES

No Page

Table 4.1 Demographic profiles of respondents 37

Table 4.2 Respondents’ perception on halal logo 39

Table 4.3 Reliability of variables 40

Table 4.4 Correlations matrix of all variables 41

Table 4.5 Multiple regression 42

Table 4.6 Summary of the hypotheses result 45

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LIST OF FIGURE

No Page

Figure 2.1 The Theoretical Framework 28

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ABSTRAK

Menyedari akan tahap permintaan terhadap bahan makanan halal yang semakin

meningkat, kerajaan sedang berusaha untuk menjadikan Malaysia sebagai sebuah negara

pengeluar makanan halal yang terpenting di rantau ini. Walaubagaimanapun, disebabkan

oleh sikap beberapa pengeluar yang ingkar untuk mematuhi syarat-syarat halal yang telah

ditetapkan, penguna mula mempersoalkan kesahihan sijil Halal yang dikeluarkan oleh

JAKIM. Oleh itu, kajian ini telah dijalankan dengan bertujuan untuk mengenalpasti

faktor-faktor yang mempengaruhi tahap keyakinan pengguna terhadap sijil halal yang

dikeluarkan oleh JAKIM. Untuk tujuan ini, analisa regrasi berganda telah dijalankan

terhadap 80 orang pengguna Islam dengan mengunakan keadah soal selidik mudah. Hasil

dari analisa tersebut, adalah didapati faktor pembungkusan dan imej syarikat pengeluar

mempengaruhi keyakinan pengguna secara positif terhadap sijil halal yang dikeluarkan

oleh JAKIM. Pada masa yang sama, faktor-faktor lain dalam kajian ini seperti keimanan

pengguna, label, tempat produk dikeluarkan, media dan sijil-sijil lain yang diperolehi

oleh syarikat tidak menunjukkan sebarang kesan positif yang signifikan terhadap tahap

keyakinan pengguna Islam kepada logo halal tersebut.

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ABSTRACT

Realizing the great demand of halal food in Malaysia and in the world in general,

there are efforts by the Government to make Malaysia as a regional hub for halal food

products. However, there is a situation now when consumers start questioning about the

actual halal content of products that have been certified as halal by JAKIM. This scenario

happens due to the actions by certain manufacturers that do not fully comply to the

JAKIM requirement in meeting the specified halal standard. Hence, this study is

undertaken in order to determine factors that influence the Muslim consumer’s level of

confidence on the JAKIM’s halal logo. For this purpose, a multiple regression analysis

was performed on 80 Muslim consumers surveyed through convenient sampling. From

the analysis it was found that packaging and company’s image give positive influence on

consumer’s level of confidence on the halal logo issued by JAKIM. On the other hand,

other factors under study such as religiosity, labeling, product produced, media and other

certifications did not produce any positive significant influence on consumer’s level of

confidence on the halal logo.

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Chapter 1

INTRODUCTION

1.0 Overview of Halal Food Industry in Malaysia

Muslim consumer’s confidence on halal logo was not a major issue debated in the past.

During those days, consumer was normally relying very much on the official halal logo

issued by the Government before they make the decision to purchase or consume food

products of their likes. However, as the business of halal food grows, stiffer competition

is unavoidable. In order to survive and remain in the business, some companies had gone

beyond the existing law and let the moral and ethic behind them. The news of non-halal

moon-cakes that bear with JAKIM’s halal logo shocks us, especially the Muslim (Berita

Harian, Sept 30, 2004). It was also reported that food products worth of RM 2.86 million

have been confiscated from January to October 2004 due to the offence of misusing the

JAKIM’s halal logo (Utusan, Oct 10, 2004). In the wake of the recent case of companies

being hauled up by the authorities on suspicion of using non-halal casing, such as pig

intestines for their sausage products, Foreign Ministry Datuk Seri Syed Hamid Albar said

that JAKIM and the Domestic Trade and Consumer Affairs must come up with a fail-safe

strategy to protect the country’s halal certification. He feared that Malaysia’s

representative abroad might be questioned about the halal issue and this could hurt the

country’s position as a halal food hub (Star, March 20, 2005). It is indeed necessary for

authority to improve the situation quickly so that Malaysia’s reputation as a global halal

food hub will not be damaged and consumer’s confidence can be fully restored. Hence, it

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is very timely a study on factors that influence the level of confidence on JAKIM’s halal

logo is being undertaken among the Muslim consumers.

In a country which has 24 million population, out of which 60% of them are

Muslim, food manufacturing companies will find it very crucial to ensure that the

sensitivity and the concerned of this majority group are well taken into account on

whatever business decision being undertaken. For the Muslim population, the most

sought-after assurance that can be offered by the food producers is the confirmation that

the products sold are really halal, hence safe to be consumed and eaten, which is through

the halal certificate labeled on the package of their products. The halal certification will

enable manufacturers to convince the consumers, especially Muslim that their products

have been confirmed by an independent third party, namely Jabatan Kebajikan Islam

Malaysia (JAKIM) as having ingredients that do not contain any components that are not

halal according to the Syariah Law. Thus, these products are considered as clean,

consumable and eatable for them.

As an independent party that is made responsible by the Government to award

companies with the halal certificate, JAKIM has spelled out a clear guideline and

requirements for any companies that wish to attain the certification. Besides JAKIM, the

Islamic Religious Department of various states is also given the same responsibility by

the Government. As of to date, there are 534 companies which have been awarded the

halal certification, out of which 391 or 73.2 percent were small and medium scale

enterprises (Utusan, June 29, 2004).

It is estimated that the volume of global halal market is worth approximately

US$150 billion (RM570 billion) to US$200 billion (RM760) a year (Utusan, Jan 16,

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2005). China, Thailand, Australia and Brazil are currently the world’s leading countries

in the halal food industry (Berita Harian, Dec 9, 2004). Realizing this fact, the

Government has set a target to make Malaysia as a global halal food hub. As such,

companies are encouraged to get their products certified so that they can meet the

Government’s projection of capturing five percent of global halal food market within the

next five year. Currently, Malaysia captures only a mere one percent of this market share

(Utusan, June 8, 2004). At the same time, by becoming the halal hub, Malaysia can

expect itself to progress higher from the current standing as the world’s seventeenth

strongest trading nation within the next few years (Utusan, April 29, 2004).

In Malaysia alone, if one were to estimate the daily food consumption of Muslim

population as RM1.00 per day per person, there will be at least RM14 million worth of

daily demand of halal food in the country. This is equivalent to a demand of more than

RM5 billion a year (Star, Jan 31, 2005). As the number grows due to increase in the

country population and also due to the new trend of more West Asian tourists visiting the

country every year, efforts have been made by the Government to boost the food

production capacity and capability through various efforts. As an example, the recent

event of 5th

Malaysian International Food Conference 2004, held at the Putra World

Trade Centre from July 15 to July 16 attracted participant from Malaysia and other

nations. Besides, the Government also has organized inter-ministerial meeting, forums,

dialogues and international conferences and exhibition.

The food industry has been a very serious affair for the government, not only

because of the increasing population, but also due to the growing number of business

activity in this industry. As a matter of fact, in 2002, Malaysian imports of processed

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food were valued at RM5.7 billion, while exports were RM4.7 billion. The country spent

RM13.9 billion on food import in 2003. From January to September 2003, import of meat

alone is worth RM338 million (Berita Harian, Dec 9, 2004). At the same time, from 1995

to June 2003, the Malaysian Industrial Development Authority (MIDA) issued licenses to

424 food manufacturing companies with total investment of RM5.9 billion (Star, Jan 31,

2005). These figures emphasize the importance of food industry which has been

identified as the third most important sector for the country economic growth behind

manufacturing and services industries.

1.1 Background of the Study

In the world of globalization that comes along with stiffer competition, companies can no

longer able to enjoy a continuous spell of market dominance for too long. This situation

is no exception to food manufacturers and distributors. Today, consumers are more

sensitive, knowledgeable and very responsive to their surrounding. They expect

manufacturers to fulfill their needs, expectation and intuition much more than the earlier

generation did. More specifically, for the vast majority of Muslim consumers in this

country, they will only buy products that are considered halal. The halal logo labeled on

their products will only ascertain consumers of the halal ingredients of the product and

also the processes of preparing the foods itself.

JAKIM which has established itself since 1968 and has been issuing halal

certificates since 1974 has made itself more reachable to the public by having its own

homepage (http: // www.halaljakim.gov.my ) for companies to have better information

http://www.halaljakim.gov.my/

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and access to the halal food procedures and guidelines. Without doubt, this has increased

the awareness of the issues to the companies in general.

In this country, the government, through Kementerian Perdagangan Dalam Negeri

dan Hal Ehwal Pengguna (KPDNHEP) could act according to Akta Perihal Perdagangan

1972 to defaulters of this halal logo law. Under this act, individuals can be fined for not

more than RM100,000 or jailed for not more than three years if found guilty of abiding

the law for the first offence. For the companies, they can be fined for not more than

RM250,000 for the similar offence (JAKIM, 2004). From another prospective, the

unlawful practice of these parties could tarnish the image of the industry itself and put

back the cloud of uncertainty of the halal food to consumers. More seriously, they might

put the government effort to establish Malaysia as a regional halal food hub into disarray.

As a matter of fact, consumers normally rely on the Government especially

JAKIM on the issues regarding the halal products. However, due to the recent events

regarding the wrong doings committed by some manufacturers, consumers are getting

more anxious and they started questioning the authority whether they still can trust the

halal logo alone before they buy or consume food products.

1.2 Problem Statement

For companies in this country, the significance of being certified as halal and having their

products labeled with the logo is known without much doubt. Halal logo has become a

common tool for the purpose of convincing the 14 million Muslims in this country and

the estimated 1.5 billion throughout the world (Utusan Malaysia, Aug 27, 2004). If the

consumers become convinced by the logo, this means that the industry can serve

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consumers’ requirement and hence the opportunity to expand their market in Malaysia

and go beyond the border to grab the bigger cake in the outside world can be within their

reach.

However, with the various cases being reported on manufacturers that do not

follow exactly the halal certification procedures, one starts to wonder whether Muslim

consumers nowadays still have the confidence on the JAKIM’s halal logo. Muslim

consumers are left bemused with the report that within the first six months of 2004 alone,

JAKIM has detected 27 cases of various types of unlawful use of halal logo through out

the country (Utusan, July 16, 2004). Hence, the issue of confidence on JAKIM’s halal

logo among Muslim consumer is so crucial to be identified as the whole system of halal

certification will be under a very heavy pressure if Muslim consumers start questioning

the effectiveness of the halal certificate issued by JAKIM.

Consequently, in order to understand fully about the Muslim consumers’ point of

view about the halal issues and for the authority to improve the effectiveness of the halal

certification system that has been much under pressure, there is a need to conduct a study

on the Muslim consumer’s level of confidence on the JAKIM’s halal logo in this country.

The following issues could further emphasize the need for the study in this area to be

conducted.

a) There are still many food products in the market produced locally by Malaysian

that labeled with halal logo not certified by JAKIM.

b) Many imported food products are using the halal certificate issued by the

government of the country where the foods are produced.

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c) Having set the target to become a hub for halal food for the region, the halal

certification of this country should be seen as reputable and reliable as much as

the other standard such as ISO 9000 or being the complementary.

1.3 Objective of the Study

This study will be mainly discussing the halal certification issues from the Muslim

consumer’s point of view. More precisely factors that are affecting the customer’s level

of confidence toward the JAKIM’s halal logo will be examined. Thus, the study will

focus mainly on the following subjects.

1. To investigate whether product packaging has any influence to the

consumer’s level of confidence on the halal logo.

2. To investigate whether product labeling has any influence to the

consumer’s level of confidence on the halal logo.

3. To investigate whether the product produced has any influence to the

consumer’s level of confidence on the halal logo

4. To identify whether media have any influence to the consumers’ level of

confidence on the halal logo

5. To identify whether religiosity has any influence to the consumer’s level

of confidence on the halal logo.

6. To identify whether company’s image has any influence to the consumer’s

level of confidence on the halal logo.

7. To investigate whether other certifications obtained by companies have

any influence to the consumer’s level of confidence on the halal logo.

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8. To identify which one of these factors described above has the greatest

influence to consumer’s level of confidence on the JAKIM’s halal logo.

1.4 Research Questions

The main objective of this research is to answer the following issues that relate directly to

the consumer’s perception on the JAKIM’s halal logo.

1) How factors such as labeling, packaging, product produced, media,

religiosity, company’s image and other certifications have any impact to

the consumer’s level of confidence on the halal logo?

2) Which of the factors mentioned above have the most significant influence

to the consumer’s level of confidence on the logo?

1.5 Significance of the Study

With the vast number of food products from various manufacturers and importers

available in Malaysian market, it is timely to ensure that the Halal logo from JAKIM

labeled on the products are genuine and issued according to the existing procedures by

JAKIM and Islamic Religious Authorities of various states. Normally, in the perspective

of consumers, the more confidence that they have on the JAKIM’s halal logo, the easier

for them to decide on which product that they want to purchase and consume.

From this study, the Government especially JAKIM itself can have a better

knowledge whether the present system of the certification and its maintenance are

sufficient to convince general consumers and the Muslim population in particular. They

have to find ways and provide solutions in order to improve the perception of the general

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public. This will ensure the interest of the public is well taken into account by the

authority so that all the efforts and moneys spent will benefit the people and the public in

general.

For the companies, the findings from this study will lead them to understand

whether the halal logo alone can carry the maximum weight for the consumers to feel

convinced about the halal certification that they are craving. They will appreciate better

about other factors that might affect the consumer’s behavior to purchase. The findings

will also serve as a reminder to companies, that nowadays, consumers might not be the

same as the consumers of yester-years. They have different background, education level,

mind set and perception. Thus, they can no longer being easily manipulated and taken for

granted.

1.6 Definition of Key Variables

1.6.1 Packaging

Packaging is the way products are wrapped. The way the products are packed may

influence consumer’s perception on the actual content of the product. Hence

manufacturers always try to give the best impression of a product to consumers through

packaging.

1.6.2 Labeling

Labeling is the way products are described in-term of its content and the materials used.

Although it can be written in various languages, care has to be taken on the right choice

to be taken. It gives consumer the first impression of the product.

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1.6.3 Product produced

Product produced is defined as the place where product are produced or prepared. In

present business environment when import and export become a common practice,

consumers are normally keen to know where the product comes from. In general this

information can be obtained from the product label. Muslim customers are normally

more concerned because their buying decision are somehow depend on how confidence

they are on the way the product is prepared in that foreign country.

1.6.4 Media

Media or mass media can be explained as the means of communication that reach large

number of people in a short time, such as television, newspapers, magazines and radio.

The importance of media in business environment is getting more and more significant.

Favourable media coverage will enable company to enjoy good reputation and image to

the customers, investors and employees themselves. Adversely, unfavourable coverage

will need the company to apply certain strategy to prevent negative backlash from

jeopardizing the company’s future.

1.6.5 Religiosity

Religiosity is defined as the intrinsic religious orientation in which religion provides the

individual with the meaning-endowing framework in term of which life is understood. It

is more on a spiritually of an individual. The higher the religiosity of the individual, the

more likely for him/her to engage on activities that respect high ethics and morale.

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1.6.6 Company’s Image

Company image is defined as a way company projects itself to the public and the manner

that a company wants the public to recognize the company. Some enterprises have to

spend considerable amount to get their name recognized so that the products that carry

the company’s name can be easily noticed and recognized by customers. Companies have

to maintain their good image so that consumers will have a trust to the brand that

synonymous with the companies’ name.

1.6.7 Certification

Certification is defined as recognition received by a company, normally awarded by an

independent body after the company has proven to carry out certain good practices. The

awareness that has been created due to the certification has enable consumers to make

their choice easier as they can easily differentiate between products of their likes.

Examples of the various certifications recognized in the industry are Halal, HACCP

(Hazard Analysis and Critical Control Point), ISO9000 and ISO14000.

1.6.8 Level of Confidence

Confidence is defined as a feeling of trust in a person or thing. It is the level of how

people believe on a certain item or issues that they experience. The level of confidence on

halal logo can influence consumers’ decision on the type of food products that they

would like to purchase and consume.

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1.7 Organization of the thesis

This thesis is divided into five chapters. Following to this chapter is Chapter two which

review the literature related to halal food industry in Malysia and the factors that

influence consumer’s confidence on JAKIM’s halal logo. In chapter three the research

methodology adopted for current study will be discussed. Chapter four will discuss the

results of the finding and finally, chapter five will conclude the results of the study,

limitations and suggestions for future research.

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Chapter 2

LITERATURE REVIEW

2.0 Introduction

With the projected global demand for halal food to increase to RM2 trillion in 2005, the

Government is very serious to enable Malaysia to be one of the leading producers and

exporters. To realize this, the Government proposed double deduction incentive to be

given to producers of halal products on expenses incurred in meeting the standards to

obtain the halal certificate from JAKIM. To encourage new investments and increase the

use of modern and state-of-the-art machinery and equipment, the Government proposed

Investment Tax Allowance of 100 percent for five years be granted to companies which

produce halal food. A special fund for development and promotion of halal product will

be established with an allocation of RM10 million. This fund will finance studies in

business planning, technology and market development, as well as improving

productivity and quality (2005 Budget speech by Prime Minister, Sept 10, 2004).

2.1 The Halal Food

The term HALAL comes from an Arabic word which means lawful. In a wider contact,

halal means something that is lawful and permitted in Islam. The Collin English

dictionary defines halal as a meat from animals that have been killed according to

Muslim law.

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Halal food means food permitted under the Islamic Law (a law based on the al-

Quran, al-Hadith, Ijma' (consensus) and Qiyas (deduction of analogy) according to the

Syafei or any one of the Hanafi, Maliki or Hanbali School of Thought or fatwa approved

by the relevant Islamic Authority) and which fulfil the following conditions:-

I. The food or its ingredients do not contain any components or products of animals

that are not Halal to Muslims according to the Syariah Law or animals which are

not slaughtered according to the Syariah Law.

II. The food does not contain any ingredients that are considered najis (filthy)

according to the Syariah Law.

III. It is not prepared, processed or manufactured using equipment that is contaminated

with things that are considered najis according to the Syariah Law. During its

preparation, processing, packaging, storage or transportation, it should be physically

separated from other food that does not meet the requirements stated in items (i),

(ii) or (iii) above or things that have been decreed as najis by the Syariah Law

(Jakim, 2004).

In defining the term, the sources of the food are also determined. Food that

originated from animals such as pig and dog or their descendents are not halal. The same

goes to animal with long-pointed teeth such as tiger, cats, elephants and few others.

Predatory birds, mice, scorpion, bees, ants, lice and flies are not halal too. Animals such

as crocodile and turtle whose habitats are both on land and in water are not permitted. On

the other hand, animals like cow, rabbit, goat, camel, chicken and deer are considered

halal. Except those that are poisonous and hazardous to health, all aquatic animals and

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plants including micro-organism and mushrooms are also halal. However, these animals

can only be slaughtered by a Muslim and should follow specific requirements that subject

to the Syariah Law.

Source: JAKIM (2004)

The official halal logo issued by JAKIM as shown above can only be issued once the

certification process has been successfully completed. The use of halal logo which

indicates that the product as halal is according to an act called Akta Perihal Dagangan

1972 which comprises of “Perintah Perihal Dagangan (Penggunaan Perbahasan

“HALAL”) 1975” and “Perintah Dagangan (Penandaan Makanan) 1975” (JAKIM,

2004).

2.1 Halal Certification

In order to meet the halal certification, JAKIM would conduct a very strict examination

in order to ensure all the criteria of the requirement could be met. This includes the whole

process of the food preparation which comprises the handling, packaging, transportation

and storage aspects. One critical issue is the food or its ingredients should not contain any

components that are not halal. Besides, the equipment and tools used should not be

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contaminated from any filthy elements. They cannot be used to prepare both halal and

non halal food at the same time either. Total segregation from the non-halal products is

required during the whole process and this does not stop there, but continue until the

serving stage, so that any contamination or mixing can be avoided.

Hygiene and sanitation are another aspect that is very much emphasized. It does

not only comply with the food itself but also the personnel, clothing, equipment,

packaging materials and premises used to process and manufacture the product. This is

being carried out so that foods are prepared without containing any hazardous risk to

human health. The mentioned principles are embodied in the document “Recommended

International Code of Practice - General Principles of Food Hygiene (Ref. No. CAC/RCP

1-1969, Rev. 2 (1985))” and strict adherence to it is recommended. This document is in

Section 1, Volume 1B, Codex Alimentarius - General Requirements (Food Hygiene)

(JAKIM, 2004).

To maintain the confidence level of the consumers to the authority, JAKIM has

underlined some very strict examination guidelines. Only if the examiner appointed is

fully confident and satisfied beyond any reasonable doubt that all aspects of the

examination which also include management practices have been complied, he/she will

confer the halal status to the product.

For any foreign establishment to get their product certified, JAKIM requires site

inspection by local competent authority together with the company-appointed Islamic

Organization. This Islamic organization that needs to be officially accredited by JAKIM

has the responsibility to supervise and monitor the halal status of the plant. Once the

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examination has been successfully completed, the halal certificate will then be issued.

JAKIM will award the halal status for one year as the initial conferment.

Upon getting the halal status, company is subjected for a periodic inspection once

in every two years. Nevertheless, the accredited Islamic organization appointed by the

certified company has the obligation to continue monitoring the activities of the

establishment and to submit an annual report to JAKIM. Failure to comply with these

requirements or any prove of breach in the halal requirements will lead JAKIM to

withdraw the halal status awarded to the company and also to restrict the recognition

accorded to the Islamic organization. In the case of company found to be no longer

functional or has been deregistered by the authority, obviously, JAKIM has the right to

withdraw the certificate too. JAKIM also emphasis that it has the authority to suspend for

a period of not less than five years for any irresponsible practice conducted by any

certified companies.

Until recently, besides JAKIM, the state’s religious department can also conduct

inspection and issue the halal certification. However this is limited to product that are

marketed in the individual state only and not crossing to other states. For example,

product with halal certificate issued by Majlis Agama Islam Kedah can only be marketed

in Kedah alone and not to Penang or other states. In contrast, product certified as halal by

JAKIM can be sold national wide and exported to other countries. However, this practice

shows that there is a non-uniformity of halal certificates and label. With about 10 halal

certificates issued by different authority, confusion may arise when enforcement and

prosecution of offence are concerned (Buang & Zakaria, 2004 ).

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However, very recently, as announced by the consumer and internal trade

minister, Datuk Mohd. Shafie Apdal, in response to public confusion and in the effort to

streamline the halal certification procedure, the Government has appointed JAKIM as the

only issuer of the halal certification. This means that the state religious department has no

more authority to do so (Utusan, Dec 14, 2004).

Although the function of JAKIM has been very significant, based on our current

existing law, the guidelines issued by JAKIM have no legal authority. JAKIM’s role in

providing services and issuing halal certificates and guidelines is actually without any

clear basis of law. It is seen as merely coordinatory and advisory to the state government

and other government agencies in relation of halal and products. Therefore, the

establishment of a central body at federal level for the supervision, control, promotion

and education of halal in Malaysia is deemed necessary (Buang & Zakaria, 2004).

Nevertheless, in order to strengthen the certification system, the Domestic Trade

and Consumer Affairs Ministry has made a very significant decision by taking over the

task of monitoring the production and distribution of food items bearing JAKIM’s halal

logo. This task was formerly the responsibility of JAKIM which now will merely issue

halal certificates and accompany the ministry’s enforcement team on inspection rounds.

In the past, the ministry had given JAKIM the power to carry out enforcement exercises

(Star, March 18, 2005).

As confirmed by Datuk Dr. Abdullah Md Zin, the Minister in the Prime

Minister’s Department in Kuala Lumpur recently, JAKIM has no power to act against

traders who use other halal logos. He added that, even if the traders use a halal logo

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bearing a camel for instance, JAKIM still cannot act as the logo is not belong to JAKIM.

JAKIM can only act if JAKIM’s halal logo is forged (Utusan, Oct 26, 2004).

2.3 Importance of Certification

The importance of product certification in any industries is well understood. It has been

recognized by most successful industries for many years. It gives advantage to both

producers and customers alike in term of benefits that can be offered from the

certification. In the producers’ point of view, certification will enable them to eliminate

wastes and losses. It helps them to improve the process, design and workmanship.

On the opposite side, the certification process ensures customers that certain

quality control has been taken when the product is being produced and thus the physical

properties and the characteristics are made according to the required standards.

Certification obligates a quality control process to oversea effective implementation of

required production conditions and assures quality standards (Dimara & Skuras, 2001).

Products that come to market without any certifications can surely be questioned

by customers about its quality and reliability. As the our standard of living and education

level improve, we are clearly entering a new era in which customers want to be informed

more about the content of food they purchased and eat. At the same time, customers are

expecting more information on where the products come from and how they are produced

in order for them to be sure about the safety and health aspects of the products. For export

products, certification could reduce barriers to international trade.

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2.4 Factors that Influence Level of Confidence

The confidence that consumers have on JAKIM’s halal logo is crucial for the Muslim

population, the Jakim itself and the whole food industry in Malaysia. As the entrusted

body of the Malaysian government, the success of Jakim relays heavily on its ability to

perform the task of ensuring the public that the issues of halal and non-halal of products

that being offered in market place are being well taken care off by the body. Public

confidence on the halal logo will continue to be argued as long as people have the feeling

that the halal logo alone that being labeled on the package of product cannot convince

them to buy and consume the products. Several factors that influence the consumer’s

level of confidence will be examined and discussed in the following paragraphs.

2.4.1 Product Packaging

The importance of having a packaging that can communicate to the potential buyers is

never been doubted. Consumer is a skeptical listener and more elusive than ever, hence

marketers are facing an increasing pressure to be able to communicate well with the

consumers. In an attempt to reach and persuade, one marketing communication tool that

continues to grow in importance is product packaging (Underwood & Ozanne, 1998).

The importance of product package at the point of purchase can be considered as

life-blood of a firm. It is referred as a silent salesman as it makes the final sales possible,

and gets the product in the consumer’s shopping trolley. In other words, package can

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also be considered as a window to customers as through package, they get the initial

impression about the product which includes its quality and value. In the case packaging

of food product, where the product is not in its final form, package helps consumer to get

the impression of the product in its prepared stage.

It is crucial as part of a design strategy that a brand must be able to gain attention

and consideration on the basis of point-of-purchase appearance. This is more critical in

the case of new brand introduction, brand repositioning, brand extensions and the

signaling of product changes.

Factors that influence consumer’s decision to purchase have always been a

favorite topic of discussion. Past research suggest that package form, function and/or

appearance can influence customers’ quality perception and overall product evaluations

(Underwood & Ozanne, 1998).

2.4.2 Product Labeling

Product label that stick on the package forms as a means for communication between

manufacturer and consumer. The more information that can be understood presented on

the label, the better informed will be the consumer. Underwood and Ozanne (1988)

argued that the communication from manufacturer (package) to the consumer was found

to be typified by a lack of trust. They added that consumer often feel betrayed, tricked or

duped.

In delivering information to consumers, Elaboration Likelihood Model (ELM)

remains an influential approach for understanding the effective communication between

the manufacturer and customer. This model is concerned with how information is

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processed. If consumer motivation and the ability to evaluate the information presented is

high, the processing of information communicated is likely to be through. If the issue-

relevant messages are strong rather than specious, data will be processed favorably.

Davis and Wright (1992) noted that an analysis of consumer purchasing behavior

suggests that many consumers do not appear to pay particular attention to labeling

information. They continue that the important contributor to this behavior is due to lack

of knowledge about food additives and processing. The complexity, with which

information is presented, makes ingredients cues and other food claims difficult to be

encoded in a meaningful way. White and Parsons (2001) added, studies showed that

warning labels that comes with difficult words were seen as less safe by people regardless

of their educational background. Hence the ultimate purpose of warning that is to inform

and protect consumers the possible danger of using a product, are often not fulfilled.

2.4.3 Product produced

The effect of product produced on consumers’ evaluation of products and services has

been the subject of extensive studies. Quester, Marr and Yeoh (1996) in their experiment

on shelf labeling of country of origin in Australia noted that there was no significance of

Australian-made labeling on sales. On the other hand, Wall, Liefeld and Heslop (1991)

noted that the country of origin information tend to be more important in affecting

product quality assessment than price and brand information.

In the study conducted on fresh meat in Sweden, Hoffmann (2000) concluded

that, women use country of origin as a quality cue to a larger extent than men in terms of

evaluating both food quality and food safety. He also observed that income was found to

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decrease the probability of perceiving country of origin as a useful quality indicator for

pork and beef but not for chicken.

Dimara and Skuras (2001) argued that the importance of certification,

geographical association and traceability as extrinsic quality cues varies among

customers and thus the use of such quality cues targets specific market segments. They

added that product with geographical association are targeted to consumers that are

seeking the authentic and traditional product which they found the information from the

product’s label.

2.4.4 Media

The effect of mass media coverage on marketing climate of any products is enormous.

The significant of media coverage in the world where information has become a key

factor for the success or failure in the present business community has taken nobody by

surprise. In the media saturated environment where we live today, consumers are

bombarded with information in various type of nature. TV, internet, radio, telephones,

short massage system and various print publications have taken their task differently but

effectively that they almost cannot be ignored by consumers. Thanks to the latest

technology advancement, news or any type of information propagated either from the

official source or just purely rumour will spread out quickly and can reach almost every

part of the community in a way that never been experienced before.

It has been noticed that company has to make a public statement in order to stop

the news that may tarnish its image and may cause consumers loose their confidence on

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the halal status of its product. This happened despite the fact that product has never been

deregistered from the halal status by local authority.

As a result of many media exposures of the wrong doings by companies on the

halal logo, some consumers have doubts on seeing the logo displayed on the products.

There are suggestions that JAKIM should announce to public about their findings on

audits conducted to the certified companies. Some suggested that to confirm the

certification, the short message service (SMS) should be used. Consumers might just

need to type the certification number and sent it to JAKIM. The reply from JAKIM is

expected to include the company’s name that own the certification number, date it is

certified and its expiry date, product name, and confirmation if the product has been

certified by JAKIM or not (Utusan, Nov 19, 2004).

2.4.5 Religiosity

Religiosity influences someone’s perception and believes in life. It plays considerable

role in determining consumer attitude and beliefs towards various consumer practices.

Depending on the level of religiosity, consumer will act in a manner that suit to values

and ethics that they hold. Due to the factor of fear of Allah’s punishment in this life and

in the hereafter, more religious consumer will perform their life duty as closest possible

to the religious belief and prevent themselves from engaging in activity that are against

the religious guidelines.

Khraim (2000) concluded that Islamic religiosity is “the degree level of individual

commitment, involvement and practice internally and externally to the fundamental

principles of Islam.”

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